INFORMATION

Saturday, March 14, 2009

Sir,I need the proper format for costing. Can you send it to me.Thanks & regards,Jayanta

Back in May 2006, I posted a series of articles to help explain both the format of the period food cost results and the impact of each component. The report format varies for hotels and resorts with more than one profit center. When you have central purchasing and transfers of both stock items and batch recipe items, you need a more complex approach. It helps to start with a matrix.

The rows of the matrix are the formula components. You would have a column for each profit center (including the central purchasing - warehouse operation). The transfer activity should net to zero for the entire operation (i.e. transfers in equal transfers out). In theory, central purchasing & control's revenue and usage should be zero. All cost should flow to the operating units. We can evaluate each profit center's performance (as a % of revenue) and use the statistics to explain overall performance.

[Click on the matrix for a larger view.]

The goods available for use number is exactly the same as the simple formula. The beginning inventory plus purchases equals goods available. Usually, purchasing is done centrally and the profit centers will have very little purchasing activity.

Transfers out of the commissary to the units should closely track purchases since food is perishable. When net commissary transfers are far less than purchases, par stock levels should be modified to prevent future over stock conditions.

The commissary equals goods available plus the net transfer activity minus the ending inventory. We should see zero or a very small usage amount. A negative result would indicate a error in your data entry.

Each profit center's usage is simply the beginning inventory plus net transfers minus ending inventory. Divide the usage by the revenue to find the usage as a % of sales.

Your cost per meal is the combined cost of all meal components. In a burger meal, you would cost the burger patty, bun, toppings (cheese, lettuce, tomato, etc.), standard condiments (ketchup, pickles, mayonnaise, mustard, etc.), fries, oil consumed cooking fries, soft drinks, garnish and any other items served to a guest when they order the meal.